Growth in global oil demand flipped from a five-year high in the third quarter of last year to a one-year low in the fourth quarter due to exceptionally mild temperatures in the early part of the winter in Japan, Europe and the United States, and weak economic sentiment in China, Brazil, Russia and other commodity dependent countries, the International Energy Agency (IEA) said in a report.
It said in its latest Oil market Report (OMR) that demand fell to 1 million barrels/day (mb/d) in the last quarter from a high of 2.1 mb/d.
“Persistent oversupply, bloated inventories and a slew of negative economic news pressured prices so that by mid-January crude oil touched 12-year lows. The OMR outlook for 2016 has demand growth moderating to 1.2 mb/d,” the IEA said in a statement.
It said global oil supplies expanded by 2.6 mb/d last year, following hefty gains of 2.4 mb/d in 2014. By last December, however, growth had eased to 0.6 mb/d, with lower non-OPEC production that pegged below year-earlier levels for the first time since September 2012.
“OPEC crude output eased by 90 000 barrels per day (90 kb/d) in December to a still-lofty 32.28 mb/d, including newly rejoined Indonesia. Iran, now relieved of sanctions, insists it will boost output by an immediate 500 kb/d. Our assessment is that around 300 kb/d of additional crude could be flowing to world markets by the end of the current quarter.”
The report said global inventories rose by a notional 1 billion barrels in 2014-15, with the fundamentals suggesting a further build of 285 mb over the course of this year. Despite significant capacity expansions in 2016, this stock build will put storage infrastructure under pressure and could see floating storage become profitable, it added.